Automotive Engine Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Automotive Engine Market is projected to expand from USD 99.86 Billion in 2025 to USD 145.55 Billion by 2031, reflecting a CAGR of 6.48%. As the central mechanical power unit, the automotive engine utilizes internal combustion or hybrid technology to transform chemical energy into the kinetic force needed for mobility. Market growth is primarily supported by rising global vehicle production to accommodate urbanization and the burgeoning logistics sector. Furthermore, combustion engines remain indispensable within hybrid powertrains, bridging the gap between traditional propulsion and fully electric solutions while adhering to increasingly stringent emission standards.

A significant obstacle to market expansion is the rapid shift toward pure electric mobility, which removes the need for conventional engines in favor of electric motors. This transition is intensified by government mandates banning fossil fuel vehicles in key economies, forcing manufacturers to reallocate funds toward alternative technologies. Despite these headwinds, the market scope remains extensive. According to the European Automobile Manufacturers Association, global car sales hit 74.6 million units in 2024, highlighting the enduring demand for automotive propulsion systems.

Market Drivers

The increasing global production and sales of passenger and commercial vehicles serve as a primary catalyst for the automotive engine market. As emerging nations develop industrial infrastructure and mature markets replace aging fleets, the demand for reliable transportation drives the manufacturing of internal combustion units. This trend is particularly notable in major production hubs, where output is scaling to meet domestic and export needs, maintaining a strong correlation between vehicle assembly and engine procurement. Data from the International Organization of Motor Vehicle Manufacturers in March 2024 indicates that global vehicle production rose by 10 percent year-on-year in 2023, totaling 93.5 million units.

Concurrently, the rapid adoption of hybrid powertrain architectures is invigorating the sector by pairing traditional engines with electric propulsion. Unlike fully electric models, hybrids retain an internal combustion engine, thereby sustaining production lines and justifying ongoing investment in thermal efficiency. This approach enables automakers to meet stricter emission rules without discarding existing fuel-based infrastructure. According to Toyota Motor Corporation's financial results for the fiscal year ended March 31, 2024, global sales of its hybrid electric vehicles jumped by 32.1 percent to roughly 3.7 million units. Further emphasizing the sector's financial significance, Cummins Inc. reported full-year sales of 11.7 billion USD within its engine segment in 2024.

Market Challenges

The rapid global shift toward pure electric mobility presents a fundamental obstacle to the automotive engine market's growth. This transition involves replacing internal combustion engines with battery-powered electric motors, thereby eliminating the need for traditional mechanical powertrains in an expanding vehicle segment. As governments implement tighter emission rules and schedule fossil fuel vehicle bans, automakers must redirect capital from engine development toward electrification. This reallocation restricts the innovation and production capacity available for conventional engines, leading to a progressive reduction in their market presence.

The impact of this trend is clearly demonstrated by the sharp decline of fossil fuel propulsion systems in key markets. According to the European Automobile Manufacturers’ Association, during the first nine months of 2025, the combined market share of petrol and diesel cars in the European Union dropped to 37%, a notable fall from the 46.8% recorded in the same period of 2024. This contraction highlights how the increasing adoption of electric vehicles is actively diminishing the volume of traditional engines demanded by the industry.

Market Trends

The adoption of hydrogen internal combustion engine technology is gaining momentum, especially within the commercial vehicle sector, as manufacturers aim to decarbonize heavy-duty transport while utilizing established mechanical architectures. By combining existing piston infrastructure with zero-carbon hydrogen fuel, this technology provides a practical alternative to battery-electric systems for long-haul logistics where range and payload are crucial. This strategic move toward flexible fuel solutions is highlighted by recent industry advancements; for instance, Cummins Inc. announced in February 2025 the launch of its Cummins HELM™ engine platforms, designed to operate on low-carbon fuels such as hydrogen to meet future fleet needs.

At the same time, the widespread implementation of 48V mild hybrid systems is reshaping the passenger car market by offering a cost-efficient path to meeting strict emission standards. These architectures capture kinetic energy to support the internal combustion engine, significantly improving fuel efficiency without incurring the high manufacturing costs of full electrification. This technological shift is driving major changes in consumer buying habits. According to a July 2025 report by the European Automobile Manufacturers' Association, hybrid electric vehicles - including mild hybrid powertrains - achieved a record market share of 34.8% in the European Union during the first half of 2025, underscoring their dominance in the transition away from pure fossil fuel propulsion.

Key Players Profiled in the Automotive Engine Market

• Mercedes-Benz
• Cummins Inc.
• Toyota Motor Corporation
• BMW
• General Motors
• Honda Motor Company Ltd.
• Hyundai Motor Company
• Suzuki Motor Corporation
• Stellantis N.V.
• Scania AB

Report Scope

In this report, the Global Automotive Engine Market has been segmented into the following categories:

Automotive Engine Market, by Vehicle Type:

• Passenger Cars
• Commercial Vehicle
• Two-Wheeler

Automotive Engine Market, by Placement Type:

• In-Line
• V-Type
• W-Type

Automotive Engine Market, by Fuel Type:

• Petrol
• Diesel
• Other Fuels

Automotive Engine Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Automotive Engine Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

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